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4 Monster Stock Predictions For Earnings During The Week of April 30
Michael Kramer and the Clients of Mott Capital own shares of TSLA and MA
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The week of April 30 will be the last big week for earnings, and the headliner will be Apple on Tuesday and Tesla on Wednesday. There are plenty of other companies, due up with MasterCard and Square. But let’s face it, Apple has a whole supply chain that is likely to move with it.
My record for this blog fell to 1 and 4 last week after getting only one of my five predictions right. I’m looking at this week to pull back to near even, or maybe pull ahead. If I can merely go 3 for 1. I’ll take it after last week’s misery.
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Apple
Analysts are looking Apple to report revenue jumped by 15.35 percent, to $61.02 billion, while earnings are seen rising by 27.8 percent to $2.69. It is hard betting against Apple because last quarter investors were awaiting a doomsday type of report, and the company still managed to beat estimates on both the top and bottom lines.
The Apple chart doesn’t look all that strong, and I could really see the stock retesting the $150 lows, from the middle of February, in the days and weeks to follow.
But if anything it probably also presents an opportunity, because let’s face it, Apple is the dominant smartphone maker, and they have an ecosystem like no one else. It is also unlikely to see Apple make the same mistake twice, and my hunch is that that the launch of the new phones come September will be met with far better reception. There are plenty of people that skipped this latest upgrade cycle, like me, and will be in the market for the next iPhone soon enough.
The options set to expire on May 4, are not pricing in a big move in the stock, with a rise or fall of about 5 percent from the $162.50 strike price. It places the stock in a trading range between $154 and $171. The number of open puts at that the strike price outweighs the call by nearly 2 to 1, with 5,400 open put contracts, with only 2,300 open call contracts.
It is worth noting that shares are down about 11 percent from their 2018 highs, and it would not surprise me to see that most of the bad news has already been priced into Apple’s stock and that the company once again surprises the street and be better than expectations. I don’t think that means that Apple rallies on to new highs, but I do believe share will rise following results, only to continue trading in the range between say the upper 150’s to low 170’s.
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Tesla
Tesla will report results on Wednesday after the close, and everyone will be watching that cash burn closely. Forecasts are calling for 22 percent revenue growth in the first quarter to $3.3 billion, and a net loss of $3.52 per share. But more importantly, was that Tesla finished last quarter with $3.368 billion in cash, where will that cash balance be at the end of this quarter, good question.
As I noted at the start of the week, Tesla registered nearly 5,200 Model 3 VIN with the NHTSA on April 23, and another 250 on April 27. The big tell here will be if Tesla came back and registered more VIN’s on Monday.
The chart tells me nothing at this point, other than that the stock is trending downward. It looks like one gaint mess.
The long straddle options strategy set for expiration on May 4, is suggesting shares of Tesla rise or fall by about 8 percent falling results, placing the stock in a trading range between $271 and $318, a vast range. Open interest on both puts and call is minimal, just a couple hundred contracts on each side.
Again, it comes down to two things, the Model 3 ramp rate, and cash balance. I think Tesla surprises on both, and shares rise back towards the $320 following the results.
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Square
Square is set to report results on Wednesday as well, with analysts looking for the company to say that revenue rose by 43.8 percent to $293.07 million, while earnings are seen only climbing 7.2 percent to $0.05.
The options set to expire on May 4, are implying a rise or fall in Square of about 8.5 percent from the $48 strike price. It places the stock in a range between 44 and 52. Open interest for the week is thin, for that expiration date. The options set to expire on May 18, are paired, at the $48 strike at 6,000 each. It suggests betting seems relatively even.
The chart tells a different story, one a stock that has been trending lower, with a relative strength index that is also trending lower. I think based on the chart, you should see Square continue to trade lower to the side of the trading range, towards $42, over the short-term.
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MasterCard
The option set to expire on May 4 for MasterCard, are implying a rise or fall of fall of only 3.7 percent from the $177.50 strike price. It places the stock in a trading range of $171 to $184. But there are over 10,000 open call contracts up at the $185 strike price and at the cost of $0.40 per contract, they carry a breakeven price of about $185.40, nearly 5.5 percent higher than the stocks price of $175.94 as of Friday.
Analysts are looking for the company to report earnings rose by 23 percent to $1.24 per share, while revenue is seen jumping by 19 percent to $3.25 billion. Given Visa’s strong result, I would not be surprised to see MasterCard put up strong numbers as well.
The chart would suggest the stock rises to about $184 after results. The RSI is trending lower, but there also seem to be strong support in the RSI around 40, and I would not be surprised to see the RSI breakout of the downtrend, following the results.
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That’s it for now.
-Mike
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Tags: #earnings #april30 #apple #tesla #square #mastercardÂ
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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